The billionaire U.S. hedge fund manager who controls a large stake in Sears Canada may be working with another big shareholder on a possible deal involving the beleagured retailer, which is currently in creditor protection as it closes stores and restructures.

In a release issued before the start of stock market trading, Eddie Lampert and his firm ESL Partners said they and Fairholme Capital Management have hired legal representatives in connection with Sears Canada's proceedings under the Companies' Creditors Arrangement Act.

"In connection with such engagement, ESL and Fairholme are evaluating, discussing and considering a potential negotiated transaction with [Sears Canada] and its subsidiaries," the parties said.

ESL owns more than 46.1 million common shares of Sears Canada, or approximately 45.3 per cent. Fairholme Capital is reported to have a 20 per cent stake in Sears Canada. Both ESL and Fairholme are based in Florida.

ESL and Fairholme indicated they may talk, either together or individually, with Sears Canada, the monitor in the CCAA proceedings and other parties about the retailer's business affairs.

The firms said any potential transaction with Sears Canada could include financing agreements, purchase and sale agreement, or restructuring agreements.

One retail advisor said he has questions surrounding the investors' motivations for seeking a possible deal with Sears Canada.

"Is this a genuine attempt to take a retailer and try and turn it back into a going concern, or this is more a manoeuvre by Fairholme Capital to simply try and extract the 20 per cent that it has tied up in Sears Canada back out of that business before it crashes and burns?" asked Doug Stephens, founder of Retail Prophet. "That's really, ultimately the question."

Sears Canada is scheduled to be in court on July 13 to seek approval to suspend some benefits for its retired employees, and to request an extension of its creditor protection until October as it tries to restructure.

When it filed for court protection last month, the company said it planned to close 59 stores and lay off 2,900 employees.

More U.S. store closures

On Friday, Lampert, who is also the chairman and CEO of Sears Holdings in the U.S., revealed in a blog post that the company will shutting down eight Sears and 35 Kmart stores south of the border by early October.

That move comes on top of hundreds of store closures announced earlier this year.

With files from Dan McGarvey